Wonga failed to keep afloat after a £10m injection of cash failed to save it from going bust

Why has Wonga gone bust?

In 2014, the firm brought in a new management team and wrote off £220million worth of debt belonging to 330,000 customers after admitting handing out loans to people who could not afford to repay them.

Wonga was processing thousands of compensation claims after it was accused of irresponsible lending, targeting vulnerable customers and charging sky-high interest.

In August 2018 it was kept afloat thanks to a £10million emergency cash injection from shareholders.

But Wonga said the cash injection only led to an influx of new claims and the firm has been unable to cope with the demand.

In a statement, Wonga said: "The Boards of these entities have assessed all options regarding the future of the Group and have concluded that it is appropriate to place the businesses into administration."

City regulators are reportedly in talks with Wonga over selling parts of the firm in an effort to save 500 jobs.

The company has stopped taking new loan applications, but is still collecting repayments.

Grant Thornton has been appointed to act as administrator after the company held emergency talks with the Financial Conduct Authority (FCA) over the impact of its collapse on existing customers.

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Can I still claim compensation?

Yes, you can still submit a claim if you feel that you are owed compensation - but you might not see any of the money.

Now it has gone bust, you'll potentially need to register a claim as a creditor with the administrator.

You'll be added to a list of all the people who are owed money by the company.

Banks that lent money to Wonga will get a payout first, so there might not be anything left by the time they get to people with unsecured debts, such as customers who say they are due compensation.

How to claim compensation from payday lenders

IF you think you are owed compensation from a payday lender, here's how to claim according to money blogger DebtCamel:

You'll need to prove that you couldn't afford to take out the loan at the time that you borrowed it. If having the loan meant that you couldn't pay your bills or other debts then you were irresponsibly lent to.

You may also be entitled to compensation if you made any late repayments or if you took out back-to-back loans because this shows that you really couldn't afford to take out a new loan.

Look back through your emails, bank statements and credit report for evidence.

You'll need to write a formal complaint letter to each lender explaining how you were irresponsibly lent to and include the evidence.

You'll need to cite "unaffordable loans" and ask for a refund of the interest and charges you paid, as well as the 8 per cent Ombudsman interest on top.

Make copies of all of the evidence before sending anything in case anything happens to them.

Wait up to eight weeks to hear back from the lender. If you're not happy with the answer, or they don't get back to you, contact the free Financial Ombudsman Service.

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